Shale-gas supplies over-hyped, report says

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CHARLESTON, W.Va. -- The potential for natural gas from shale formations to fuel the nation's energy future is greatly over-hyped by the industry and its political supporters, according to a recent report that says wells are playing out faster than has been projected.Geologist David Hughes says in the report that "the geological and environmental realities" of the ongoing boom in shale gas and shale or "tight" oil "deserve a closer look" by political leaders and the public."The projections by pundits and some government agencies that these technologies can provide endless growth heralding a new era of 'energy independence,' in which the U.S. will become a substantial net exporter of energy, are entirely unwarranted based on the fundamentals," Hughes wrote. "At the end of the day, fossil fuels are finite and these exuberant forecasts will prove to be extremely difficult or impossible to achieve."Hughes wrote the report, "Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?" for the Post-Carbon Institute, a nonprofit group that conducts analysis and educational programs aimed at the eventual end of carbon-based fuels. A version of Hughes' analysis appeared as a commentary in the latest version of the scientific journal Nature.

Hughes notes that there has been a sharp increase in shale-gas production nationwide, from about 2 percent of U.S. production in 2000 to nearly 40 percent in 2012.Two technologies -- horizontal drilling coupled with hydraulic fracturing, or fracking -- have made it possible to reach oil and gas reserves that previously were not accessible. In 2004, less than 10 percent of U.S. wells were horizontal. Today, that figure is 61 percent.But Hughes says a pattern has emerged in shale-gas fields."When a play is discovered, a leasing frenzy ensues," he wrote. "This is followed by a drilling boom because the lease assignments, often 3 to 5 years long, can be terminated if the site is not producing gas.

"Sweet spots -- small areas with high productivity -- are identified and drilled off first, with marginal areas targeted next," he wrote. "Average well quality rises at first, and then declines."In four of the five shale-gas plays, average well productivity has been falling since 2010," he wrote. "In the Haynesville play, an average well delivered almost one-third less gas in 2012 than in 2010."Hughes says the exception is the Marcellus Shale. "Supply is rising in this young, large play as sweet spots are still being found and exploited," he wrote.Hughes says that wells "decline rapidly within a few years." Those in the top five U.S. shale-gas regions typically produced 80 percent to 95 percent less gas after three years.In West Virginia, industry and political leaders tout the Marcellus Shale as a boom for the local economy now and in the future, and as a way for the state to help make the nation energy independent."The Marcellus Shale and other shale-gas plays in the country, which have now been found to have supplies of natural gas not previously thought recoverable, are changing our world and illuminating the way for jobs for the current and future generations of West Virginians," Tomblin said in the West Virginia Division of Energy's new state energy plan. President Obama has also touted shale-gas supplies, and has promised to reduce government "red tape" to speed up permitting of new drilling and production.But Hughes warns that the shale-gas boom might not be the long-term bonanza that industry supporters make it out to be.

"Although the extraction of shale gas and tight oil will continue for a long time at some level, production is likely to be below the exuberant forecasts from industry and government," he wrote. "I see supplies of shale gas declining substantially in the next decade unless prices rise considerably. A more realistic debate around shale gas and tight oil is urgently needed -- one that accounts for the fundamentals of production in terms of sustainability, cost and environmental impact."Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.